Autocall Structured Funds: Your Complete Guide to Success

Autocall funds are structured products that are becoming increasingly popular among investors seeking diversification and capital protection. 

Autocall funds are structured products that offer partial or full principal protection, as well as a fixed, capped return linked to the performance of a stock market index or a basket of securities. They are suitable for long-term investments and can be included in various types of investment vehicles, but it is important to fully understand how they work and their characteristics before investing your money in them.

These specific financial instruments allow investors to set profit targets and loss limits in advance, while also offering the possibility of automatic early redemption. But how exactly do autocall funds work, and what key features should you be aware of before investing your money in them?
 

What is an autocall fund?
Autocall funds are financial products that belong to the structured products family. Their name comes from the English term “automatically callable,” meaning they offer the possibility of automatic early redemption. Their performance is based on the performance of a stock market index or a basket of securities, and they are distributed by a bank or an insurance company.
 

How does an autocall fund work?
Autocall funds offer a fixed, capped return linked to the performance of the stock index or basket of securities to which they are tied. They generally offer returns of more than 5%, and the profit targets and loss conditions are known in advance. However, the investor does not know how long the investment will last; only a maximum term is set, usually between 5 and 10 years.
 

What other characteristics of autocall funds should you know about?
In addition to maturity, there are two other criteria to consider when incorporating autocall funds into your investment strategy: the strike price and the protection barrier. The strike price corresponds to the benchmark value of the selected index on the product’s launch date, while the protection barrier determines the threshold below which the invested amounts are protected.
 

Autocall funds are suitable for long-term investments
Autocall funds are well-suited for long-term investments and can be included in various types of investment vehicles, such as life insurance policies, PEA accounts, or regular securities accounts. They offer potentially high protection against declines in financial markets, which can be particularly attractive during periods of high volatility or political instability.
 

Guidelines to Follow Before Choosing an Autocall Fund
Before investing in an autocall fund, it is important to carefully read the product prospectus, which lists the benefits and risks, as well as the investment fees. Entry and management fees are generally around 2% or 3%, but may be higher depending on the provider. It is also recommended to diversify your portfolio and not invest all of your savings in a single product.